Velo3D, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Equity Incentive Plans and Stock-Based Compensation

Equity Incentive Plans and Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Equity Incentive Plans and Stock-Based Compensation

As of March 31, 2024, the Company had a remaining allocated reserve of 29,230,966 shares of its common stock for issuance under its 2021 Equity Incentive Plan (the “2021 EIP”), which provides for the granting of stock options, restricted stock units (“RSUs”) and stock appreciation rights to employees, directors, and consultants of the Company. As of March 31, 2024, the Company had an allocated reserve of 9,955,400 shares of its common stock for issuance under its 2021 Employee Stock Purchase Plan (“2021 ESPP”). As of March 31, 2024, the Company had not begun any offering periods for the 2021 ESPP.

Stock options

Activity under the 2021 EIP is set forth below:


	Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in years
	(In thousands)	(Per share data)		(Years)
Outstanding as of December 31, 2022	16,960	$	0.54	7.3
Granted	—	$	—
Exercised	(1,186)	$	0.26
Forfeited or expired	(385)	$	0.63
Outstanding as of March 31, 2023	15,389	$	0.56	7.0
Options vested and expected to vest as of March 31, 2023	15,389	$	0.56
Vested and exercisable as of March 31, 2023	10,800	$	0.67

Outstanding as of December 31, 2023	13,152	$	0.61	6.2
Granted	—	$	—
Exercised	(1,614)	$	0.18
Forfeited or expired	(144)	$	0.81
Outstanding as of March 31, 2024	11,394	$	0.67	5.9
Options vested and expected to vest as of March 31, 2024	11,394	$	0.67
Vested and exercisable as of March 31, 2024	10,897	$	0.68

The aggregate intrinsic value of options outstanding was $2.4 million and $2.3 million, respectively, as of March 31, 2024 and December 31, 2023. Intrinsic value of options exercised for the three months ended March 31, 2024 and 2023 was $0.2 million and $3.5 million, respectively. The total grant date fair value of options vested was $0.1 million and $0.3 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, total unrecognized compensation cost related to options was $0.1 million related to 0.5 million unvested options and is expected to be recognized over a weighted-average period of 0.8 years.

For the three months ended March 31, 2024, there were no options granted.

Restricted Stock Units

The fair value of RSUs under the Company’s 2021 EIP is estimated using the value of the Company’s common stock on the date of grant.

The following table summarizes outstanding and expected to vest RSUs as of March 31, 2024 and 2023 and their activity during the three months ended March 31, 2024 and 2023:


	Number of Shares	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
	(In thousands)	(Per share data)		(In thousands)
Balance as of December 31, 2022	9,623	$	4.47	$	17,225
Granted	4,180	2.11		8,819
Released	(400)	5.55		1,300
Cancelled	(948)	4.37		2,520
Balance as of March 31, 2023	12,455	$	3.65	$	28,274
Expected to vest as of March 31, 2023	12,455	$	3.65	$	28,274

Balance as of December 31, 2023	20,066	$	1.94	$	7,978
Granted	1,133	0.35		393
Released	(1,668)	2.41		444
Cancelled	(1,271)	1.92		480
Balance as of March 31, 2024	18,260	$	1.80	$	8,319
Expected to vest as of March 31, 2024	18,260	$	1.80	$	8,319

The aggregate intrinsic value of outstanding RSUs is calculated based on the closing price of the Company’s common stock as of the date outstanding. As of March 31, 2024, there was $29.9 million of unrecognized compensation cost related to 18.3 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 2.9 years. As of March 31, 2023, there was $40.9 million of unrecognized compensation cost related to 12.5 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 2.9 years.

Earnout Shares––Employees

The Earnout Shares issuable to holders of employee stock options are accounted as stock-based compensation expense as they are subject to forfeiture based on the satisfaction of certain employment conditions. The estimated fair values of the Earnout Shares associated with vested stock options are recognized as an expense and determined by the Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis over the five-year earnout period. The portion of the Earnout Shares associated with unvested stock options are recognized as an expense and considers the vesting continuing employment requirements.

Stock-based Compensation Expense

The following sets forth the total stock-based compensation expense by type of award included in operating expenses on the statements of operations:


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Restricted stock units	$	3,829	$	4,058
Stock options	60		750
Earnout shares–employees	1,198		1,428
	$	5,087	$	6,236

The following sets forth the total stock-based compensation expense for the stock options, RSUs, and earnout shares - employees included in cost of revenue and operating expenses on the statements of operations:


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Cost of 3D Printer	$	389	$	194
Cost of Support services	195		72
Research and development	1,550		2,803
Selling and marketing	1,054		1,495
General and administrative	1,899		1,672
	$	5,087	$	6,236